When must a Fat Shack franchisee provide proof of insurance to FSI?
Fat_Shack Franchise · 2025 FDDAnswer from 2025 FDD Document
Franchisee will provide proof of insurance to FSI prior to commencement of operations at its FAT SHACK Restaurant and proof of workers compensation insurance prior to sending any employee to the training program described in Article 7.
This proof will show that the insurer has
been authorized to inform FSI in the event any policies lapse or are cancelled. FSI has the right to change the types and minimum amount of insurance Franchisee is required to maintain by giving Franchisee prior notice. Noncompliance with the insurance provisions set forth herein shall be deemed a material breach of this Agreement; in the event of any lapse in insurance coverage, in addition to all other remedies, FSI shall have the right to demand that Franchisee cease operations of the FAT SHACK Restaurant until coverage is reinstated or, alternatively, pay any delinquencies in premium payments and charge the same to Franchisee.
Source: Item 23 — Receipts (FDD pages 53–223)
What This Means (2025 FDD)
According to Fat Shack's 2025 Franchise Disclosure Document, a franchisee must provide two types of insurance proof to FSI at different times. First, the franchisee must provide proof of general insurance coverage for the Fat Shack restaurant and its operations before commencing operations. This demonstrates that the franchisee has secured the necessary insurance to protect the business from potential liabilities from day one.
Second, the franchisee must provide proof of workers' compensation insurance before sending any employee to the initial training program described in Article 7 of the franchise agreement. This ensures that any employee participating in the training program is covered in case of work-related injuries or accidents during the training period.
Furthermore, the insurance policies must show FSI as an additional insured and provide for 30-day advance written notice to FSI of cancellation or modification. This protects FSI's interests and ensures they are informed of any changes to the insurance coverage. Noncompliance with these insurance provisions constitutes a material breach of the agreement, potentially leading to a cessation of operations until coverage is reinstated.